The Independent Commission Against Corruption (ICAC) today heard Mr Macdonald stood to gain a $4 million cut from a coal mining deal, as well as kickbacks from a forestry project and V8 Supercar racing.

The $4 million figure was in hand-written notes seized during a raid on the office of his long-time friend Greg Jones.

The coal company investor, who now lives in Hong Kong, took the ICAC stand today to answer questions about his mate and the money.

Mr Jones said wide public knowledge, especially in business and political circles, of his friendship with Mr Macdonald was the reason he tried for a long time to cover up his shareholding in Cascade Coal.

Cascade is the company that planned to pay $60 million to the family of Mr Obeid to buy them out of a coal exploration licence they had been granted by Mr Macdonald.

The ICAC was shown notes in Mr Jones's own hand that suggest he has channelled $35,000 to Mr Macdonald in cash and gifts, and a loan for $195,000 that was never repaid.

On top of that, the notes contained the following words: "Cascade Coal, Mount Penny, 5 per cent, $4 million, approved by June 2010."

But Mr Jones denied offering Mr Macdonald a $4 million cut and other cash kickbacks from the coal deal linked to Mr Obeid.

This is how the exchange took place between Mr Jones and ICAC commissioner David Ipp:

Ipp: I'm asking you whether an uninitiated reader, understanding English, would construe the references to '5 per cent for Mount Penny', and the reference to '$4 million approved by June 2010', and the reference to '5 per cent, why not?', as being a reference to someone getting 5 per cent... or wanting 5 per cent..."

Jones: That could be the case Mr Commissioner.

Ipp: Do you know anybody who wanted 5 per cent?

Jones: No.

Ipp: Well then it must be somebody getting 5 per cent. Do you know anybody who got 5 per cent?

Jones: No.

Counsel-assisting Geoffrey Watson: It was Ian Macdonald wasn't it? He was going to get a cut.

Jones: No.

Cascade Coal later issued a statement denying any knowledge of alleged financial arrangements, dealings or communications between Mr Macdonald, or persons associated with him, and Mr Jones.

Mr Jones did tell the hearing he discussed various projects with Mr Macdonald when the former Labor minister was in parliament.

He admitted some of the discussions took place in restaurants such as The Rockpool in Sydney's CBD.

When he was asked who paid for the meal, Mr Jones quipped: "Have you ever known a politician to pay for a meal?"

On the stand today Mr Jones also admitted he was made a consultant on a project to run the V8 Supercars at Homebush when Mr Macdonald was in parliament.

But when he was questioned about his own hand-written financial records, Mr Jones could not explain where $55,000 in payments from the Supercar project had gone.

He was questioned about allegations the money was paid to Mr Macdonald through an offshore bank account.

The inquiry has also heard allegations Mr Macdonald stood to make more than $300,000 from a separate forestry deal while he was in parliament.

Tooth fairy?

He denied knowing about a family trust and if the family had colluded with Mr Macdonald over mining tenders.

Mr Ipp asked him if the tooth fairy paid for his $2.5 million home.

Yesterday, another Obeid son, Paul, denied that Mr Macdonald had specially created a mining tenement that covered the Obeids' properties.

He admitted encouraging an accountant to use what he called "white lies" to answer a reporter's questions about the family's mining projects, but he denied lying to the ICAC.

Paul Obeid told the inquiry the family tried to get into mining joint ventures with several companies before Mr Macdonald called for tenders for coal licences in the Bylong Valley.

When ICAC resumes next Monday, Mr Mcdonald will be in the witness box and will have his moment to explain his role in issuing licences that benefited the Obeid family to what the clan itself says is at least $75 million.